Final Market Readiness Proposal Country: Indonesia FINAL MARKET READINESS PROPOSAL: INDONESIA
Introduction: MRP Focus Core Technical and Institutional Readiness Components in Power and Industry Sectors: • Emission profile and baseline setting • MRV system development and piloting in electricity generation and cement production Planning for a Market-based Instrument: • Technical assessment and policy consultation on market instrument • Piloting the selected instrument 2 FINAL MARKET READINESS PROPOSAL: INDONESIA
Introduction: MRP Objective The Objectives: To understand and determine the type and scope of appropriate market-based instruments; to prepare supporting draft regulation as needed; to design and establish market infrastructures; to build required capacity of participating institutions and individuals. The Long Term Goal: The establishment of new market mechanisms or market based instruments to scale-up mitigation actions in Indonesia based on country- specific conditions and international carbon market situations. 3 FINAL MARKET READINESS PROPOSAL: INDONESIA
Process of Revising MRP Consultations with other ministries after PA6 Changes in MRP text to update its context, better formulation of focus and objectives, as well as to address PA6 questions Incorporate timeline, list of activities and budget Presentation of final MRP to relevant ministries as the result of MRP preparation works 4 FINAL MARKET READINESS PROPOSAL: INDONESIA
Update on Context Joint Crediting Mechanism (JCM) between Indonesia and Japan was established in August 26, 2013. The new development will not affect PMR Implementation Phase much. However, JCM experiences may provide knowledge and awareness to support Implementation Phase. 5 FINAL MARKET READINESS PROPOSAL: INDONESIA
General feedback from PA6 Feedback Follow Up 1. Some of the figures in 1. Done. Indonesia MRP presentation should be incorporated to the final proposal (figures in the slide number 40). 2. Need some clarifications on 2. Done. PMR institutional arrangements. 3. Nusantara Carbon Scheme 3. Done. We put a text box to and other new initiatives describe the NCS. should be described clearer. 4. Need to consider the time 4. Done. We already consult framing on the proposed with the ministries involved. schedule. 6 FINAL MARKET READINESS PROPOSAL: INDONESIA
Specific feedback from PA6 Feedback Follow Up 1. Done. A text box of MBI is 1. Elaborate as much as possible already incorporated to the the direction it expects to go proposal. in terms of emission trading, crediting, a combination of the two or something entirely new. 2. Done. We put the latest 2. Include discussion on demand progress of JCM and its and how it is expected to demand. develop, and more details on bilateral relationship with Japan. 7 FINAL MARKET READINESS PROPOSAL: INDONESIA
MRV and data issues feedback from PA6 Follow Up Feedback 1. Express clarity on the work on 1. Responses on MRV are found MRV for NAMAs by BAPPENAS on paragraphs: 114,116, Table or other ministries. 9, Table 10, paragraphs 124. 2. On data: explain emission data 2. There is no further detail data from industries already yet from the Ministry of obtained and explain how Industries. mitigation potential (sectoral) is determined. 3. On data collection: it is 3. It’s explained on the important that the reporting institutional tracks of the MRV entities understand the development. purpose of the data collection 8 FINAL MARKET READINESS PROPOSAL: INDONESIA
Sector choices & baselines feedback from PA6 Feedback Follow Up 1. More discussion on the 1. It’s explained in para. 64, 65, selection process of narrowing and 66 the choice from 11 to 3. 2. It’s explained in para. 70 2. Explain how this top down target is with respect to bottom up activities that are being carried out. 3. More information on the 3. It’s explained in para. 72 planned cap: what kind of cap is it, will it cover individual emission? 4. Explain whether there is lesson 4. It’s explained in MBI Text Box learnt or possible synergy to be contributed to the success of this PMR activities. 9 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 1 Provide climate change policy context in Indonesia. Total GHG emission in 2020 is estimated to reach 2.95 GtCO 2 . Forestry and peat will remain as major emissions sources until then, however, energy related emissions will have the highest growth rate. Indonesia is committed to reduce GHG emissions by 26% below BAU level in 2020 by its own resources. With international support, further emission reduction could achieve 41%. An indicative list of activities to achieve the target is available (RAN-GRK). Market-based instruments can be a promising tool to cost- effectively abate GHG emissions to support achievement of unilateral GHG emissions reduction target, or even beyond that. 10 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 2 Provide the process of target areas selection for PMR Implementation Phase The process involved considerations such as: Existing policies Emissions reduction potential Replicability Technology availability Investment effectiveness Stakeholder supports Issues in MRV Market sustainability The selection process resulted two target areas for priority sectors in PMR Implementation Phase: electricity generation and energy-intensive industries 11 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 2 (ctd.) The selection process provides logical framework for the MRP as summarized below: Law No. 30/2007 of Law No. 32/2009 of Law No. 6/1994 of UNFCCC Energy Environmental Protection Ratification GR No. 70/2009 of Energy PR No. 61/2011 of National Policy Conservation Action Plan for GHG Reduction Context PR No. 28/2008 of National PR No. 71/2011 of National GHG Industry Policy Inventory Gap Analysis MoI No. 14/2012 of GHG Reduction Road Map MEMR No. 14/2012 of Energy Management in Cement Industry MRV System in Power and Industry Sector Market-based Instrument Design Cost & Expected Assessment; Selection; Design; Benefit Framework; Scope; Mechanism & Governance; Guidelines; Output Analysis Piloting; Etc. Piloting in Jamali & Cement Industry; Etc. Expected MBI Design + Energy Management GHG + Piloting Outcome System Information Information for Policy Making Goal Best Practice Benchmark for Other Sector 12 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 3 Describe the existing works and further works necessary to develop a robust and reliable database useful for future target setting. All activities to support this shall be participatory, transparent, reliable and encourage consensus among stakeholders. Budget Activities Needed Requested (USD) (USD) A. Profiling Emissions in Power & Industry Sectors A comprehensive carbon abatement cost curve in the two target areas. 700,000 300,000 A calculated / reviewed / estimated sectoral baseline emission of the target areas 250,000 100,000 Total 950,000 400,000 13 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 3 (ctd.) Describe the activities to be conducted in order to develop a working MRV system within power and industry sectors. MRV system development works will be divided into Governance Track and Piloting Track. Governance Track will deal with policy support development, institutional framework development, relevant guidelines development, data management, etc. to ensure the MRV system is workable dan sustainable. The development works will build upon the existing practice to the farthest extent as possible and appropriate. Piloting Track will focus on fine tuning the MRV system taking into account the participants circumstances. All activities shall be participatory, transparent, reliable and encourage consensus among stakeholders. 14 FINAL MARKET READINESS PROPOSAL: INDONESIA
Summary of Building Block 3 (ctd.) Budget Activities Needed Requested (USD) (USD) B. MRV System Development (Governance Track) Rules and regulations on MRV 450,000 250,000 Institutional set up for MRV 600,000 300,000 Capacity building and awareness raising activities 1,000,000 250,000 Total 2,050,000 800,000 C. MRV System Development (Piloting Track) Map of MRV activities at the installation level in Indonesia 200,000 100,000 Monitoring protocols 500,000 200,000 Data management system at the installation level 600,000 250,000 GHG emission data and review on MRV system at installation level and at aggregated data management level 400,000 100,000 Total 1,700,000 650,000 15 FINAL MARKET READINESS PROPOSAL: INDONESIA
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